Establishing federal rules of patent procedure

Fostering and protecting innovation through patents is a core American value — it’s in our Constitution. Over the years, the U.S. has created the greatest system for innovation ever known. But, like all thriving systems, the patent system needs routine tending and improvement. This is exemplified by recent concerns about alleged patent system abuse by some patent assertion entities that do not innovate or provide any products or services, but simply acquire patents for the purpose of monetizing them. This is the first of a three-part series of articles discussing certain “patent reforms” recently raised to address these concerns.

At the outset, however, it is important to proceed cautiously so that we do not harm the patent system that has brought us so far. Take smartphones, a modern marvel of innovation. What lives would have been saved if early settlers could have held in the palms of their hands maps showing their location, bad weather on the trail ahead, and where their loved ones were staying? The rate of innovation in smartphones has spoiled us — we constantly expect new features. Woe (if not whoa) to a smartphone provider that lets even a few months go by without introducing continued innovative features, and it is our great patent system that has helped fuel this innovation.

While our patent system is great, it is not flawless. It needs updating from time to time to account for current technologies and industries. Targeted tweaks that avoid foreseeable unintended consequences can enhance, without harming, the patent system. For example, several decades ago, U.S. patent law faced a problem: The patent laws were not being uniformly applied in courts across the country. Regional circuits interpreted the Patent Act differently, with some taking pro-patent positions while others were reputedly anti-patent. This led to forum-shopping, as litigants sought to increase their chances for victory by filing suit within certain circuits. To address this problem, in 1982, Congress established the United States Court of Appeals for the Federal Circuit, vesting the new court with (virtually) exclusive jurisdiction over appeals of patent cases. The result has been more predictability and uniformity in the application of substantive patent law throughout the country.

Today, many believe the patent system is again in crisis, and “patent reform” is a hot topic. Several bills have been proposed in Congress, and even President Obama has weighed in. But while the issues facing the patent system in the pre-Federal Circuit days involved mostly substantive patent issues, the perceived problematic issues today are mostly procedural. Some have raised concern that the length of a patent litigation and the machinations within it, along with the attendant costs, vary widely depending on the district court in which the litigation is brought. Some argue that certain patent assertion entities use the unpredictable cost of litigation and business disruption to extract settlements from their targets. Defendants may settle these cases not on merit, but because settling is cheaper than litigating. Some suggest that this procedural problem may be addressed by procedural solutions. Perhaps the patent system could benefit from uniform rules of patent litigation procedure, just as it benefitted from the establishment of the Federal Circuit.

Many district courts across the country conduct patent cases under so-called “patent local rules.” The Northern District of California was the first to pioneer this practice back in 2001. Since then, over 20 district courts have established their own sets of patent local rules. Many of these sets of rules address issues common to most patent cases, such as the timing and procedure for preparing infringement and invalidity contentions, and claim construction procedures. But the scope of these rules can vary widely among jurisdictions, and many district courts have no patent local rules at all, causing litigants to battle it out on a case-by-case basis.

Some suggest that a set of “Federal Rules of Patent Procedure” would provide uniformity to procedures in all patent cases nationwide, to provide more predictability and less forum shopping and litigation-related gamesmanship in patent cases.

Special procedural rules for patent cases would not be unprecedented. Such special rules already exist for admiralty and bankruptcy proceedings. Building on the experience of the many district courts in applying their specialized patent local rules, the Judicial Conference could promulgate a similar uniform set of rules to govern all patent cases across the country with respect to the special procedural nuances of patent law.

Litigants dealing with the myriad issues and specialized procedures associated with most patent cases may benefit in uniformity in both procedural and substantive patent law issues. Establishing uniform rules of patent procedure may continue the progress made toward a stronger and more predictable patent system that was started when the Federal Circuit was created to unify substantive patent law over thirty years ago.